In certain humanitarian crises, goods and services are available on the market, but the affected population has lost the means to buy them. In such cases, cash transfers and vouchers can ensure that humanitarian aid reaches those who need it most. Vouchers provide access to pre-defined commodities or services, while cash transfers are unrestricted and enable beneficiaries to meet their basic needs such as food or non-food items. Cash and vouchers can be delivered securely through a range of systems, including financial service providers and mobile phone operators.
A strong evidence base shows that cash transfers are often more efficient and cost-effective than other forms of aid, as described in several studies, including the report Doing cash differently (ODI, 2015) and the strategic note Cash Transfers in Humanitarian Contexts (World Bank Group, 2016). With reduced transaction costs, cash and vouchers result in more aid directly reaching beneficiaries, which ultimately ensures the maximum impact for those in need and better value-for-money for donors and taxpayers. Cash transfers also provide people in need with wider and more dignified assistance, giving them the flexibility to choose what to purchase based on their preferences. Finally, cash assistance supports local markets, lays the foundations for communities’ recovery and resilience, and can complement existing social safety protection systems.
Humanitarian cash assistance has to be planned carefully in order to prevent unintended effects, such as inflation or imbalances in local markets while reaching vulnerable groups. Local markets are analysed as part of a preliminary needs assessment before a programme is put in place, and local governments are always involved. In most cases, a combination of delivery mechanisms (cash, vouchers, in-kind assistance and service provision) may be required to meet the needs of the affected population.
In times of growing humanitarian needs and limited funds, the European Union is committed to increase the efficiency, effectiveness and impact of the humanitarian assistance it provides, as laid out in its Grand Bargain commitments. When appropriate to the context, the EU actively promotes the use of cash and vouchers alongside other forms of aid from the outset. In 2017, cash transfers and vouchers made up over 38% of the European Commission’s humanitarian aid, for a total of more than €990 million. The EU Cash Compendium presents a selection of recent case studies on the EU’s humanitarian cash assistance.
The use of cash transfers to deliver the EU’s humanitarian assistance has grown in recent years. The fastest increase has come about where cash and vouchers have been provided in place of in-kind food. However, cash transfers can be an appropriate response regardless of the sector. The EU increasingly provides cash to meet the basic needs of people in need through a single multi-purpose cash grant, which beneficiaries decide how to spend. Depending on the context, assistance can be provided as an unconditional grant; in other cases, where appropriate, beneficiaries may be asked to perform some activities (e.g. community work, training) in order to receive the transfer.
In March 2015, the EU developed 10 common principles for multi-purpose cash-based assistance to guide donors and humanitarian partners on how best to work with multi-purpose assistance. The principles introduce the notion of a humanitarian response across sectors to address basic needs, with dignity, flexibility and choice for the beneficiaries. They stress efficiency and effectiveness while acknowledging that solutions are context-specific, and recall the need to uphold the humanitarian principles. The principles received political endorsement through the resulting Council Conclusions adopted in June 2015. Donors and partners are encouraged to take the principles into account when designing and implementing their responses to humanitarian crises.
The Guidance Note on the delivery of cash transfers, first issued in January 2017 and updated in November 2017, complements the EU’s policy position and existing guidance on the use of cash transfers. The guidance note applies principally in cases where the European Commission provides large-scale funding to deliver cash transfers in a given country or for a given crisis, and where cash transfers make up a significant part of the overall response.
The European Commission has helped strengthen the capacity of humanitarian actors to effectively deliver aid in the form of cash and vouchers. Through the Enhanced Response Capacity (ERC) funds, the EU has supported the work of the Cash Learning Partnership (CaLP), which provides training, conducts research and produces advocacy material and tools to monitor cash assistance, like the Cash Atlas. We have also supported the World Food Programme (WFP) and UNHCR in developing their own corporate capacity to implement cash-based interventions.